Payroll & Employment Guide: Saudi Arabia

Hiring in Saudi Arabia

When hiring in Saudi Arabia, employers must follow recent reforms that emphasise digital contracts, wage protection, Saudization, and social-insurance compliance.

Key hiring requirements include:

• Using the Unified Employment Contract, registered via the government’s Qiwa platform to ensure it is legally enforceable.
• Registering all workers (Saudi and non-Saudi) with the Ministry of Human Resources & Social Development (MHRSD).
• Verifying Saudization (localisation) obligations — particularly in regulated sectors like tourism and retail.
• Maintaining strict compliance with working hours, rest periods, and wage protection systems.

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Employee Benefits

Saudi Arabia requires employers to provide certain mandatory benefits and encourages additional perks to attract and retain talent, especially in competitive sectors.

Mandatory / Statutory Benefits:

• Social Insurance (GOSI): Employers must register employees with the General Organization for Social Insurance and pay the employer share of contributions.
• Housing & Transport: Under 2025 reforms, employers may be required to provide housing or a housing allowance and transport or equivalent cash benefits.
• Sick Leave: Statutory sick-leave entitlements apply, including an initial period of paid sick leave in accordance with the labour law.
• Maternity & Paternity Leave: Newer rules extend maternity leave and introduce paid paternity leave, with details depending on current legislation.

Other common employer-provided benefits:

• Private health insurance for employees (and in many cases, dependants).
• Housing allowances, meal allowances, and transportation support.
• Performance bonuses or variable pay schemes tied to company policy.
• End-of-service benefits, which are common in the Gulf region; exact terms follow contract and local regulations.

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Taxes & Payroll Contributions

Saudi Arabia does not levy personal income tax on typical employment income, but employers still face social-insurance and payroll-compliance obligations.

Personal Income Tax:
There is currently no personal income tax on most salaries in Saudi Arabia. Employees generally receive gross pay without income-tax withholding.

Social Contributions (GOSI):

• For Saudi nationals: GOSI generally includes employee contributions (around 9%) and employer contributions (around 11.75%) for pension and related social branches (approximate levels; exact breakdown may vary).
• For expatriates: GOSI obligations typically focus on work-injury and certain risk-branches; rules differ from those for Saudi nationals.

Payroll Currency & Payments:
Salaries must be paid in Saudi Riyal (SAR), directly to an employee’s bank account.

Wage Protection System (WPS):
Employers must pay wages through authorised banking systems and report via WPS / Mudad, ensuring timely payment and reducing wage disputes. Non-compliance can lead to penalties and restrictions on services.

Payroll in Saudi Arabia

Payroll in Saudi Arabia is centred on SAR, WPS compliance, social-insurance contributions, and new digital-contract requirements via Qiwa.

Payroll Cycle:
Monthly payroll is standard. Employers must align payment dates with WPS reporting and ensure GOSI contributions are calculated accurately.

Payslips:
Employers should provide clear payslips showing:

• Basic salary and allowances (housing, transport, etc.).
• Any overtime, bonuses, or variable pay.
• Employee contributions (GOSI) and any other deductions.
• Net salary and pay date.

Overtime:
The law and contract must define how overtime is calculated and paid. Premium rates can apply unless the role is lawfully exempt under contract and labour regulations.

Key Compliance Deadlines:
Monthly pay cycles must align with WPS submissions, GOSI contributions, and Qiwa contract verification for new hires and renewals.

Need help setting up compliant payroll and WPS in Saudi Arabia?

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Legal Regulations & Compliance

The 2025 Saudi labour-law amendments significantly increase employer responsibilities around digital contract registration, wage protection, and staffing practices.

Key legal obligations:

• Digitally register employment contracts through Qiwa to ensure they are enforceable and correctly classified (fixed-term vs open-ended).
• Comply with working-time rules, rest periods, and leave entitlements.
• Ensure outsourced staffing and agency arrangements are licensed and compliant—unlicensed outsourcing can trigger penalties.
• Maintain accurate records of contracts, working hours, leave, payroll, WPS reporting, and GOSI contributions.

Non-compliance can result in fines, reclassification of contracts, difficulty obtaining new visas, and increased litigation risk.

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Work Permits & Visas for Saudi Arabia

Employers must sponsor foreign workers through the work-visa and residency (Iqama) process. Immigration and employment status are tightly linked in Saudi Arabia.

Key employer responsibilities:

• Sponsoring work visas and Iqamas for non-Saudi employees and ensuring they remain valid.
• Registering employees and their job classifications (skill level: basic, skilled, high-skill) via Qiwa.
• Complying with Saudization targets and avoiding misclassification of jobs, which can lead to fines and visa restrictions.

Work-authorisation rules are updated periodically as part of Vision 2030; employers must track changes for their sector and workforce mix.

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EOR & PEO Services in Saudi Arabia

Using an Employer of Record (EOR) or Professional Employer Organisation (PEO) in Saudi Arabia lets you hire compliantly without building a full local HR and payroll operation from scratch.

Employer of Record (EOR) in Saudi Arabia:
An EOR can:

• Draft and register legally enforceable contracts on Qiwa.
• Sponsor work visas and manage Iqama and labour-permit processes.
• Run payroll, complete WPS reporting, and ensure correct GOSI contributions.
• Administer statutory benefits, end-of-service obligations, and Saudization compliance.

PEO Services in Saudi Arabia:
PEOs are ideal for companies that already have a KSA entity but want local support for:

• Daily HR administration and local compliance.
• Payroll, benefits, and allowances (housing, transport, etc.).
• Navigating labour reforms and regulatory changes.

EOR in Saudi

Payroll Calculator

Use Dhi ADT’s payroll calculator tailored for Saudi Arabia to estimate gross salary, employer social-insurance (GOSI) costs, end-of-service liabilities, and total employment cost. This helps you model different scenarios and build competitive offers for KSA.

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